Was that it? Was early Tuesday morning the “max pain moment”? The point of extreme panic and capitulation in everything from Russian rubles to U.S. junk bonds to Mexican stocks to volatility ETFs?

It just might be — and just as we’ve seen in the past few years, central banks were the catalyst.

First, the Central Bank of Russia announced seven measures designed to stabilize its currency, bond, and stock markets. They included everything from $7 billion in direct currency market intervention … to a pledge to recapitalize troubled banks … to the waiving of recognition of currency-related losses on bank balance sheets. Those moves came in addition to the massive hike in Russian interest rates a day earlier.

Second, Federal Reserve Chairman Janet Yellen laid the groundwork for short-term interest rates hikes in 2015 at yesterday’s Federal Open Market Committee meeting. But she tried to soothe sentiment by simultaneously talking about being “patient” with regards to future hikes.

Third, in a surprising move overnight, the Swiss National Bank actually cut rates into negative territory there. It lowered the rate on select deposits to -0.25 percent, meaning commercial banks will actually have to pay interest to the central bank to park money there for short-term periods of time.

The move is designed to fight Swiss deflation and discourage massive influxes of cash tied to the turmoil in Russia and elsewhere around the world. But it has the added side effect of pushing even more liquidity into the global markets — the same Global Money Tsunami I’ve been talking about for months.

“We may be looking at a bottom that lasts well into 2015.”

Result? Stocks soared yesterday, and soared again today. The action in the most heavily shorted sectors — energy, junk bonds, MLPs, and so on — stood out for being particularly aggressive. It looks so capitulatory, in fact, that we may be looking at a bottom that lasts well into 2015 … though it’s too early to say for sure.

Suffice it to say my advice to start picking and choosing amid the rubble in some of those sectors is looking very well-timed. I plan to continue doing so in the days ahead if the stabilization and reversal gathers even more steam!

What about you? Do you think the bottom is in for some of these hard-hit sectors like energy? Will the “sugar rush” for stocks provided by the U.S. Fed, the Russian central bank, and the Swiss central bank last? Or is it doomed to peter out? How are you positioning into year-end and early 2015 as a result? Make your voice heard at the Money and Markets website!

Our Readers Speak

Meanwhile, the surprise move to normalize relations with Cuba had many of you talking over at the website. Most readers were positive on the change, though there were some dissenters.

Reader Jon B. said: “On the one hand, I’m glad to see that the ice has been broken. Raul may not be Castro! So I’m in hopes that something substantive can come about for not only those who have had to flee but those who still remain!

“On the other hand, only time will tell. The Cuban people deserve a chance at some possible twinkling of light to flourish amongst the stagnation and darkness.”

Reader Axel K. added: “Great news that the U.S. is finally starting to restore normal relations with Cuba. We have reconciled with former enemies (think Vietnam) and treated them significantly better than we have treated Cuba, which never was at war with us.

“Diplomatic recognition simply means that one country acknowledges that another exists; it is not and never should be a moral judgment. I applaud President Obama for having the guts to tackle what has been a needlessly festering political sore for 53 years.”

Finally, Reader Stay D. said: “It’s about time. Cuba is a neighbor country. If we treat Cubans properly, the politics there will change gradually. Kudos to Obama to have the guts to do the right thing. Times are changing. We can improve Cuba; we have nothing to fear from them. As the conditions improve, people will change and appreciate.”

Still, not everyone is in favor of the move. Reader Fred said: “Cuba is run by a brutal regime that has murdered and tortured thousands and thousands of people … for nothing other than having a difference of opinion or possessing a desire for basic human rights. You might want to congratulate and sleep with that regime of genocide for a few trade dollars; I will pass. And shame on Barack Obama for his lack of compassion for the prisoners and victims that have suffered and continue to suffer at the hands of these killers.”

Cuba wasn’t the only topic of discussion though. Reader Carl responded to the Fed-fueled rally yesterday (and the follow-through today) with nothing but negativity. His take:

“The Federal Reserve, as usual, is using smoke and mirrors trying to fuel our economy … keeping interest rates low which hasn’t worked and will only prolong our sick economy. Besides, using bogus government numbers pulled out of thin air is a joke. Much like the Feds printing money out of thin air. Everything coming out of Washington is baloney.”

Finally, Reader Karl noted that the fallout from declining oil prices is spreading far beyond Russia — including just south of us here in the U.S. His cautionary words:

“Market pundits are claiming a partial victory for sanctions upon Russia in spite of crashing oil prices. The horrible knock-on effect of diminished tax revenues by governments is being experienced not just by Russia but by any oil exporting country. Flash: The commentators gleefully reporting that folks in Russia are ‘panic buying’ is also occurring in Mexico, Venezuela, Nigeria and Indonesia.

“Mexico gets 60 percent of its federal budget tax revenue from oil exports. If the price of oil does not recover, the 45 percent+ hit to their coffers on the 60 percent will drastically affect everything from food subsidies for tortillas, health care, education and revenue sharing with states and municipalities.”

Thanks for the thoughtful comments on so many different topics. I agree that the spreading damage from falling energy prices is a problem, and one reason why a policy response was increasingly likely.

Sure enough, the Fed did its best to calm markets on Wednesday and the Swiss National Bank followed up today. Russia also took several steps to halt the ruble collapse, and the result is the surge in energy stocks we’re seeing on our screens now. I believe we have seen at least a short-term bottom in sectors like MLPs and domestic energy stocks, and possibly one that will last several months.

Whatever your political views on the normalization of relations between the U.S. and Cuba, one thing is clear. Business owners see it as a chance to rake in big bucks from serving a new market, close to home, that has been closed off for decades! As this Bloomberg story notes:

“Real-estate developers, sugar growers, medical-device manufacturers and telecommunications firms each see opportunity in friendlier relations between the U.S. and Cuba, which are separated by just 90 miles.”

Speaking of Cuba, the story of how this newfound détente came around is a very intriguing one. The Washington Post gives it the play-by-play treatment here.

Did the North Koreans “win?” That’s what some are wondering in the wake of Sony Pictures’ decision to can the release of its movie, “The Interview.” I’m curious what you think — sensible move to make sure American theatergoers are safe … or a shameless give-in to pressure from a rogue nation?

Too lazy to walk to the corner drug store to get shampoo? Absolutely, positively need to get that present for a special someone by 11 a.m., rather than tomorrow or next week? Then you’re in luck … at least if you live in New York City.

Amazon.com (AMZN, Weiss Ratings: D+) is officially rolling out its “Prime Now” service, which promises delivery of more than 25,000 items within an hour or two. More products and eligible cities will be added next year.

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{24 comments }

bill stappThursday, December 18, 2014 at 4:42 pm

Very easy easy to see why much of the world hates our arrogance.That film should never have been made and is a classic example of the lack of sensitivity with the money hungry film producers.I am certainly no fan of North Korea but I wonder what our reaction would have been if North Korea had produced a film showing the killing of our President.My only disappointment is they are only losing 50 million dollars which is pocket change for them.

David EckleinThursday, December 18, 2014 at 5:33 pm

Bill Stapp – I agree with you 100%. It was tasteless of Sony to make such a picture. Also, I am discouraged that so many are jumping to the conclusion that North Korea is behind the hacking of Sony. Doing such a thing would be nearly as much a provocation as putting out this so-called “comedy”. There is some doubt among the digital community that North Korea has enough ability or connections to the outside internet world to do this, even if they really wanted to do so. Sony owes an apology not just to the North Koreans, but to those of us who want better relations between north and south and look forward to some sort of reunification. Those of us wishing to continue the dangerous state of mutual hostility and distrust may rejoice the picture was made and talk about free expression, but wasn’t it our Supreme Court Justice Oliver Wendell Holmes who gave the example that shouting fire in a crowded theater was not free speech? The Sony film may be another such example that freedoms usually come with limitations.

If we are destined to get along with the Cubans, at mutual benefit, we should try the same strategy with the North Koreans. I was there for a brief tour, and know it may be difficult, but possible with sincere efforts on both sides. A comedy film about the assassination of their leader is no way to start. See my report:http://www.frugalfun.com/north-korea.html

FredThursday, December 18, 2014 at 5:57 pm

North Korea runs concentration camps…….in 2014.

I am not in the least worried about Hollywood offending der leader with comedic satire. Would we have worried about offending Adolf Hitler with satire?

If you were talking about many other countries, you might have a point. But not N. Korea.

David EckleinFriday, December 19, 2014 at 1:13 pm

Fred- First of all, we should avoid throwing stones in glass houses. According to the International Centre for Prison Studies, the US has the second highest rate of incarceration in the world at 707 per 100,000. Only Seychelles, a tiny island nation off Africa, has a higher rate. Nobody really knows how large the incarceration rate is for North Korea, but defectors and US authorities claim between 600 and 800 per 100,000. This issue is discussed in Cuming’s “North Korea: Another Country”. Bruce Cumings (Univ. of Chicago) is probably our best authority on both Koreas, although he does have his critics. See http://en.wikipedia.org/wiki/Bruce_Cumings

You are probably thinking of Charlie Chaplin’s 1940 film “The Great Dictator”. WW2 had already started, and the conditions, personalities, and issues were quite different. In my opinion, to even compare North Korea to Nazi Germany, let alone draw a parallel between Adolf Hitler and Kim Jong Un, indicates a need for quite a bit more study.

I am taking time to reply because I sincerely believe it is in every reasonable person’s interest to avoid war. The North Koreans may not have been defeated, but they were absolutely devastated by the civil war in which US intervened. One-tenth of them died, and there wasn’t a single building left standing in Pyongyang. A film like “The Interview” is bound to increase their paranoia about our intentions, and does not move either of us closer to mutual understanding. No wonder this chihuahua barks so loudly.

We have been fortunate to avoid war on our soil in more ways than one.

TomThursday, December 18, 2014 at 5:59 pm

These central bankers are getting desperate. They now are acting like day traders, intervening with every dip in the stock market. Think about all the bubbles out there, the U.S. Bond market, the U.S. dollar, junk bonds, the U.S. stock market and even the housing market is looking frothy again, etc. If one of these starts to unwind the rest must surely follow. If the stock market or bond markets start to drop significantly or if the dollar starts to slide significantly, the whole international carry trade will come unravelled and that will spell world wide financial Armageddon. I think the central bankers have come to realize the monster they have created, that they have no way to prevent it and are desperately trying to keep things levitated as long as they can. Yesterday and today was a perfect example of their desperate state.

dobermanThursday, December 18, 2014 at 6:12 pm

If you know hollywood like i do, you know they are more greedy than wall street. Sony was in a no win situation, if they show the movie and something happens, they will be accused of profits over people, on the other hand they are now being accused of stifling freedom of speech. It probably has more to do with the royalties that the SAG members get.

I have an idea, Sony can show the movie in one theater, so that all of hollywood can attend. Then N. Korea can kill two birds with one stone…

dobermanThursday, December 18, 2014 at 6:14 pm

I hope the cuban’s don’t see the seinfeld episode with Fidel, otherwise Fox may have to worry about hacking too!

LorneThursday, December 18, 2014 at 6:23 pm

The market’s reaction in the last two days following what were well telegraphed intentions by the Fed is totally absurd. In consideration of the ” real ” happenings in the rest of the world, this is a lot more than the usual US chauvenism, it is outright manupilation.
No wonder many of us absolutely distruss Wall Street. I’m in cash with my discretionary
$ and will continue to do so despite losing opportunity returns until the next major crash,
be it next year or 2016. As a retiree, I can not afford to do otherwise.
Sorry, as much as I’ ve hated the Fed these last few years, this time it’s not their fault.
We ‘re being HAD…

Bob WaldronThursday, December 18, 2014 at 6:26 pm

Wait until we really know what role the US State Department actually played in shaping the movie with Sony before we see if the Sony Studio folks are actually trying to protect themselves from further embarrassing exposures or the US State Department’s involvement in the film.

H. Craig BradleyThursday, December 18, 2014 at 6:30 pm

KEEP A CLOSE EYE ON EMERGING MARKET PRIVATE DEBT

Most of the debt in emerging economies is private vs. bank debt, plus corporate bonds. So, large investors (Non Bank Financial Organizations such as pension funds, mutual funds) rather than banks lenders currently have the most at risk in EM debt. 70% of EM debt financing and loans are denominated in U.S. dollars and made within each country rather than from large developed nation banks overseas. So, as the dollar further appreciates and local EM currencies devalue, the cost of servicing these debt instruments grows.

There could be a liquidity squeeze in EM countries (not enough dollars). This is where the next financial crisis could erupt if the U.S. dollar goes up high enough ( U.S. Dollar Index of 100 or higher ) Any large spike in interest rates in a EM country ( like Russia ) is going quickly spill-over into their real economy and cause a deep recession. So, bad foreign debts, aggravated by being largely denominated in U.S. Dollars, could cause interest rates to go up and EM economies to fall into deep recessions. That would eventually affect S&P 500 earnings and our stock markets could unexpectedly correct.

Richard DayThursday, December 18, 2014 at 6:35 pm

Where is the evidence that Cuba has murdered or tortured thousands of people/ Sounds like Fox diatribe to me. From a country that has 50 million people who can’t afford food and more and more cities looking like the ones you left in Iraq. How many millions have you killed since WWII and how many innocent people have been secretly incarcerated under that Patriot Act? The UN defined holding people for more than 15 days in solitary confinement as torture. How many thousands are in your prisons and we know of at leadst 3 who were held that way for 40 years. Look up The Angolan Three.

Here is a short list of American atrocities. NBC had a program a few years ago and stated that at least 2200 American attempts to assasinate Castro.

So thats just a few reasons why the rest of the world gets really tired of American blather about how bad everyone else is. By the way Cuba sent 250 doctors to Africa to rtreat Ebola … how many American doctors are over there?

We turn to other Real News outfits for the truth and put almost everything out of the US as BS.

While it sounds intelligent to end that stupid embargo of Cuba we also wonder what is the catch!

pjnorThursday, December 18, 2014 at 6:57 pm

Hillary Clinton did all the leg work–Obama takes the credit–not that I am a fan of either
Good way for the Democrats to buy more much needed votes

Chuck BurtonThursday, December 18, 2014 at 8:30 pm

I just hope someone who seems to have a bit of sense runs as an Independent. He or she will get my vote. I wonder if I will ever vote for either a Democrat or a
Republican again. Both parties seem to be betraying our national principles in various ways.

HolygeezerThursday, December 18, 2014 at 7:14 pm

With moves in the market like these, there no longer is any semblance of an economy based in any kind of reality. The markets are nothing but an addict stumbling around looking for any kind of fix and occasionally getting one. Just wait until it really shoots up some toxic stuff and begins its final death rattle. It is coming one of these days.

dai jonesThursday, December 18, 2014 at 7:34 pm

It should be no surprise thathat the Swiss are employing negative interest rates. They have been doing so since the 1970s. Turn of the month Swiss was a great fun time to trade.

Chuck BurtonThursday, December 18, 2014 at 8:36 pm

There is a cheese named for that nation. I recall it is full of holes. Hmmm.

HowardThursday, December 18, 2014 at 7:59 pm

Hi Mike

Common sense says NO, but then common sense isn’t common.

Chuck BurtonThursday, December 18, 2014 at 8:21 pm

It was utterly stupid of Sony, to make that movie, and even stupider of the actors who agreed to play parts in it. Like we need to stir up that sort of thinking in the world. Mr. Kennedy may have paid with his life for apparently considering am assassination or Mr. Castro. Mr. Obama, Ms. Merkel, Mr. Xi, and even Mr. Putin better watch their backs. I am having second thoughts about buying a piece of Sony gear I have been considering.

Robert ReissnerThursday, December 18, 2014 at 11:03 pm

Do the Cubans waterboard their prisoners again and again like America’s CIA?

maxThursday, December 18, 2014 at 11:04 pm

MIKE
this is not about normalize relations with Cuba , this is stopping Russian from building
more missile sites & use Cuba as BASE to land planes set up submarine base a
refueling site for plan attack USA , This is good for the people of Cuba to reach out
and be free people !!!! this is about Russia & USA sanctions

TomFriday, December 19, 2014 at 4:43 pm

How many readers recall that when Fidel Castro seized power in Cuba, he promptly seized all American assets worth hundreds of millions of dollars?
Obama, like the Castros, is a left-wing politician who is unconcerned about US businesses whose assets were squandered and laid to waste by men whose stupidity was exceeded only by their arrogance.

Watch now how Obama will encourage fresh American investment in an island nation still run by a dictatorship. But then, fools will be fools. It has been historically true that history repeats itself!!

H. Craig BradleySaturday, December 20, 2014 at 11:57 am

Sony’s Problem

Perhaps Sony needs to retitle the cancelled movie ” The Interview ” and rename it ” The Victim ” instead. Problem solved with more marketing.

Al McNalSaturday, December 20, 2014 at 12:08 pm

With society, the government, the Fed and all the world’s central banks behind this bubble it is no wonder it has gone on for so long and grown to such an absurd and foolish state. Notice it’s also in a time of almost complete world socialism. After this no one will be able to claim socialism didn’t have its chance.

DaleFriday, December 26, 2014 at 3:16 pm

I think that the initial turmoil over the falling gas prices have led managers to renovate the way they do business. That way they can capitalize on the situation. However, this will be an ongoing saga, so stay tuned for more exciting innovations.